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RelayRides Gets a Lift From G.M.’s OnStar

RelayRidesA mobile app would allow RelayRides members to unlock G.M. vehicles that are registered with the start-up and subscribed to OnStar.

General Motors and RelayRides, a peer-to-peer car-sharing service that allows private car owners to rent their vehicles, announced a partnership and possible investment this week. Under an exclusive two-year agreement, RelayRides users will be able to unlock G.M. vehicles that are registered with the car-sharing service and subscribed to OnStar, the automaker’s communication service, with a mobile phone app.

For OnStar subscribers who sign up for RelayRides, the mobile access would take the place of aftermarket hardware installed by the start-up, saving RelayRides about $500 per vehicle, according to Andre Haddad, the company’s chief executive. In essence, cars will be coming off the line equipped for car sharing.

G.M., meanwhile, is poised to put more skin in the game. G.M. Ventures, the company’s venture capital arm, is in advanced discussions with RelayRides to make a “small” equity investment within the next few weeks or months, said the G.M. vice chairman, Stephen Girsky, in a telephone interview this week.

The RelayRides partnership is expected to be introduced in Northern California in 2012 and expand nationally by year’s end. The companies plan to demo the mobile app for the next several months at events, beginning this weekend in San Francisco.

In addition to generating revenue for G.M., the relationship could help the automaker reach new customers, said Mr. Girsky. He described RelayRides rentals as “hassle-free test drives,” affording G.M. access to the start-up’s 3,000 registered borrowers.

The opportunity is especially appealing in the Golden State.

“In California, they have a relatively large presence, and we have a relatively small presence,” Mr. Girsky added.

Vehicles from G.M. brands accounted for about 4 or 5 percent of the vehicles registered in RelayRides, Mr. Girsky said, which was comparable to the automaker’s share of the San Francisco vehicle market at large. “A handful” of RelayRides vehicles have OnStar activated, he said.

“Certainly there’s internal debate about whether this is going to work or not,” Mr. Girsky said. But car sharing, perhaps paradoxically, plays into the automaker’s product plan.

Associating G.M. technology with a start-up that appeals to urban dwellers and college students could help the automaker “stay relevant to young people,” Mr. Girsky said. Bob Tiderington, manager of new business initiatives at G.M., added that peer-to-peer car sharing could be a “disruptive marketing tactic.”

“Frankly, we’ve got nothing to lose,” he said.

OnStar is not the only system looking to leverage its communication technology for car sharing. In late August, Zipcar and Ford Motor Company announced a deal to roll out 1,000 Ford vehicles in the car-sharing provider’s university campus fleets over the next two years. Each of the Ford Focus models in that group will be equipped with the automaker’s Sync system. According to a Zipcar spokesperson, however, Zipcar has no plans at this point to use Sync or an aftermarket OnStar system in place of its own gear.

Mr. Haddad, who joined the start-up just two weeks ago, said that partnering with G.M. would allow the company to “reach critical mass much faster than we would have on our own.” The company takes a 35-percent cut of each rental, but it makes no money if the cars are not being lent out. Eliminating the need to install proprietary hardware for OnStar-equipped vehicles lowers operating costs; RelayRides can simply write software that communicates with OnStar.

RelayRides and G.M. declined to provide details, but Mr. Haddad said the two companies have agreed to split revenue by transaction. The more activity generated through OnStar, the more OnStar would benefit. As Mr. Girsky put it, “RelayRides talks to the vehicle, G.M. gets paid.”

Sam Zaid, co-founder and chief executive of Getaround, a RelayRides competitor, said that the growing amount of computing power in cars in general, and electric vehicles in particular, presented a “natural fit” for car sharing. Getaround has patented an easily installed kit for keyless vehicle access. Mr. Zaid said the company was interested in incorporating that technology into factory-built vehicles, as well as potentially seeking access to automakers’ telematics systems for the purpose of peer-to-peer car sharing.

He cautioned, however, that with 250 million cars on streets, the computing piece that facilitates car sharing “will not be one size fits all.”

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